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Policy Expert: Walmart has “immense power” over food system

Kavitha Chekuru | Al Jazeera America | Jun 19, 2015

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In mid-March, hundreds of workers who pick produce in the Mexican state of Baja California left the fields and took to the streets. The demonstrations blocked the main highway connecting the region to the U.S. In response, police used tear gas and rubber bullets to disperse the crowds.

The workers were fed up with being paid stagnant wages that were not nearly enough for them to get by on. The growers who run the farms offered them a nominal raise to get them back to work. And the federal government pledged to find a way to get the workers’ wages up to 200 pesos per day—though ultimately was unable to.

The produce pickers do make more than than Mexico’s minimum wage, but by all accounts it’s not liveable—which, according to Eric Holt-Gimenez, executive director of the Institute for Food and Development Policy (also known as Food First), is the result of a capitalist food system in operation throughout much of the world. It keeps growers’ margins low and means that the farm workers are squeezed to keep growing operations afloat.

Holt-Gimenez has studied sustainable farming in Latin America and is an outspoken advocate for transforming the global food system through activism. Fault Lines spoke with him to get a sense of what deeper institutional causes lie behind the low wages for farm workers in Mexico—and what needs to change for them to make ends meet. An edited version of the conversation follows:

Fault Lines: Can you describe the challenge of eating conscientiously in the U.S.?

Holt-Gimenez: I think that if you have the money, you should try to eat in accordance with your values—eat organic, eat local, eat products that have not exploited workers. Very often, these products, because of the way the food system is structured, are more expensive.

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But what about all the people that can’t afford to eat in accordance with their values? This business of voting with your fork—as if you could express yourself democratically with your pocketbook—only works for those who have a full pocketbook. We can’t just be consumers, we have to be citizens, and very often, we also have to do things like take direct action, advance different alternatives.

When talking about changing the food system, you’re really talking about changing the whole social, political and economic system. So it’s a deeper project than most people realize when they come to food because of taste, because of quality, because of these values that they may have—which are all great. But that, for me, is just opening the door into a system which has been constructed over centuries and has gone through many changes and is in the midst of fairly cataclysmic changes today.

What are some of the big changes we are seeing now?

People like to talk about the food revolution and what not, and I think that the term is usually misplaced. They think about a “food revolution” because we all care about our food so much now, and this is somehow revolutionary. I understand “revolution” to be a change in the structures of production, a change in the structures of power, a change in the structures of distribution.

Probably the two largest changes over the last half-century in the food system have been: One, the trend towards meat, grain-fed livestock and the increase in meat-eating in middle class diets. That’s had a tremendous impact on carbon production, for example. The other revolutionary structural change to our food system has been that basically the supermarkets have displaced all other forms of retail around the world and are continuing to do so. So now, even though you don’t necessarily see the signs, Walmart owns almost all of the supermarkets in Mexico.

So it’s been a tremendous consolidation at the retail end, which has brought tremendous profits and power to the large supermarket chains and allows them to dictate what we eat, how it’s going to be packaged, how it’s going to be produced, who is going to produce it, how much they’re going to be paid. And the consumer gives the supermarket some of this power because the consumer looks for a cheaper product. And the supermarket is able to give them a cheaper product through the economies of scale and through the exploitation of labor and farmers.

How influential can a higher end grocery store like Whole Foods be in this system?

The large retailers are the neck of the hourglass within the food value chain. So we have 7 billion eaters on the planet and around 2 billion farmers. The retailers and the processors and the shippers are at the bottleneck between the eaters and the growers. The large retailers—you know, the Tescos, Carrefours, Walmarts—are the ones that have immense power in terms of determining who gets what and for how much.
This is highly, highly skilled labor. The skill of being able to work hard, all day long, bent over, very quickly, in spite of the pain, is a skill which you need to develop as a small child.

Whole Foods is a small player in this very big game. However, Whole Foods has captured a niche within this larger market and is a powerful player within the niche. The business model of retailers globally is to pay less to their suppliers, and so they tend to like larger suppliers that can work on economies of scale—and can work off very very small margins.

The entry of Walmart into the organic market means that organic is going to get cheaper because Walmart will squeeze the organic suppliers more and more, which means that the organic suppliers will tend to industrialize more and more. And Walmart will tend to source from the organic industry on very large, industrialized organic farms. Which means, of course, that these organic farms are not sustainable at all.

So organic doesn’t necessarily mean sustainable. For example, if you were to get organic berries from Baja California in a plastic box in the middle of winter in Minneapolis, after having traveled all that way and using all these petroleum products, it’s very hard to make a case that that organic strawberry would be sustainable. It’s not.

The CEO of Los Pinos, one of Mexico’s largest tomato producers and exporters to the U.S., said that the price he gets for his tomatoes has remained unchanged for 14 years. So he can’t afford to pay the workers anymore than he already does, even though their cost of living has gone up. As far as you know, is what he’s saying accurate?

We produce too much food. For a half century, we’ve been producing 1.5 times enough food for every man, woman and child on the planet. That was true when there were 600 million hungry people; that’s true today, with a billion hungry people. The problem isn’t scarcity.

In fact, the problem is overabundance. As the growers in Mexico have pointed out, the price that they get for their tomatoes has not gone up, which means that you’re getting a falling rate of profit. Why are you getting a falling rate of profit? Because we’re producing too much. So this is going to continue as more and more capital is invested in agriculture and in food supposedly to save the world from hunger. You’re going to get this falling rate of profit, and this means that the industry is going to consolidate more and more.

What does all this mean for the Mexican workers down in places like Baja California?

Well, the fact that the growers are not getting more for their tomatoes means that the grower has to cut somewhere. So they’re going to squeeze the workers, which is the easiest place because there are so many workers.

Fault Lines travels to Mexico to investigate what is keeping wages so low for Mexican farm workers
We have a huge reserve army of labor. You know most of the world is unemployed or underemployed, so it’s very easy then to break up strikes. Everybody is looking for jobs. They’re willing to work for less. That’s especially true in Mexico, where people have been dispossessed of their land. So people will work for basically starvation wages because they need to work.

Strawberries sell for $5 to $6 per pound. The workers are getting 11 cents…

When the farmer is making less than 15 cents on the dollar, the farm worker is going to be making less than a penny on the dollar. So we have to rearrange how that dollar is distributed. Otherwise you’ll squeeze out the farmer. Farmers can pay more, but all farmers would have to be getting more. That level of exploitation of labor is generalized—even if you try to pay a little bit better, you’re not going to be able to pay that much better because overall this has already been set by the industry.

Its seems like the person that is working the hardest is getting the least.

The typical agricultural worker today is indigenous, is from [the southern Mexican state of] Oaxaca. And these are people that have been marginalized ever since the time of the conquest, who were shunted off onto the worst lands in Mexico and who have eked out an existence all this time, but have steadily sent workers up north to [the central Mexican state of] Sinaloa, then Baja California, then up into the U.S.

The problem is that we’ve had this inexhaustible resource of peasant farmers that are willing to work from sun-up to sun-down, back-breaking labor, doing very precise, repetitive movements, very very quickly, all day long, for months on end, for years at a time. No one else can do that. No one else. Students can’t do it. Prisoners won’t do it. They ask to go back to jail.

This is highly, highly skilled labor. The skill of being able to work hard, all day long, bent over, very quickly, in spite of the pain, is a skill which you need to develop as a small child, and that skill is developed on peasant farms. Now that we are destroying the peasant farms of Central America and Mexico through our free trade agreements, we are losing this inexhaustible resource of labor. So they’re killing the goose that laid the golden egg.

The minimum wage in Mexico is fewer than $5 a day. The farm workers are well above the minimum wage in Mexico. So how can we change the status quo for this exploited workforce?

“Minimum wage” is an insufficient term. People need “living wages.” That’s the problem with the world economy today. Why can’t we get out of this recession? Because people aren’t making enough money. Then all they can buy is food.

That’s what is so key to this whole equation. Food is key because you can only eat so much of it. There’s only so much of it that you can consume, then it rots and you can’t have it. You can keep on buying all the cars you want. You can have 20 of them in your garage, if you like. But you can’t do that with tomatoes. You can’t have 20 kilos of tomatoes every day. Food is different. Which is one reason why it’s so cheap.

It also means that it’s that basic commodity and that basic sector where, if you get it right, it has an influence on everything else. Walmart is the biggest employer in the world. Walmart is also the biggest grocery store in the world. So if Walmart decided to pay its employees fair wages, and if Walmart decided to pay a fair price for the tomatoes and the strawberries that they get, then the growers in Los Pinos wouldn’t have a leg to stand on when they say, “Well, we’re just not getting enough.”

This is a tremendously wealthy food system. It’s just very poorly distributed. And I think that to change it, we need very strong social movements, including workers’ movements that align themselves with consumer movements. You can’t have a strike or a boycott. You need both, which align themselves with movements for ethical consumerism, to create the political will—not just with our lawmakers who otherwise won’t be moved, but also to embarrass the industry into actually doing the right thing when our lawmakers make them do it. You need all of this to make structural changes to make this a fair food system.

So it’s going to take a large-scale organizing effort?

There’s a triangulation for change, which needs to happen between the farm worker, the consumer and the food worker—the ones working in the processing plants or in the back of a fancy restaurant. We have this very globalized food system with these long value chains—where food is coming up from Chile or from Mexico and traveling an average of 1,800 miles between producer and consumer and across several borders in a day or so.

But we have to remember that when Cesar Chavez and the United Farm Workers were organizing in the Central Valley, going from the Imperial Valley to the Central Valley was just as hard as going from San Quintin [in Baja California] to California. Distances were much longer then, it was very difficult to organize. People weren’t very mobile, they didn’t even have good access to telephones and there weren’t even fax machines. All these things which we take for granted today, like the Internet—tremendous speed of communications—were completely absent back then. And yet, people did it.

The basic formula for exercising political pressure has not changed. The means by which to do so have changed a lot—and actually have quite a bit in our favor, in terms of the speed of communications now. I think that today to talk about transnational organizing to transform the food system is no more of a wild notion than organizing farm workers in the Central Valley in the 1960s was.